Thursday, June 25, 2009

Centre to set up regulatory body for the coal sector

The Centre has initiated work on setting up a regulatory body for the coal sector on fast-track basis. The proposed Coal Regulatory Authority, which finds a place in the ministry’s agenda for 100 days, could be a precursor to significant changes likely to be ushered into the coal sector through wider participation of private sector players leading to creation of a competitive coal market for user industries.

More significant, the regulatory body would be responsible for domestic coal pricing, a sticky and politically sensitive issue particularly for a mass use energy item like coal.

"We’ve already begun the process and this will be institutionalised within the next three months," Union coal minister Sriprakash Jaiswal said at a press meet during his maiden visit to the city on Wednesday.

The minister also deflated specific questions on any attempt to hike coal prices saying that the issue is not under consideration by the government at the moment. "The target is not to raise prices but to raise production. It is not necessary to raise prices," he said, while insisting "priority will be given to power sector."

Incidentally, the creation of a Coal Regulatory Authority was part of the T L Shankar Committee report on coal sector reforms and development in the country. The draft report, which had recommended recasting the present structure of CIL, had also recommended the setting up of an Office of Coal Governance and Regulatory Authority, which would act as regulatory and development agency. The body would be a key role even as the stage is being set for entry of pure play mining companies with optimum scale of operation and access to technology that would be a big advantage.

At present, private entry into coal mining is allowed for captive use only in steel and cement sector. However, out of the 190 allottees who were offered captive coal blocks with total reserves of 40 billion tonnes, barely 13 have managed to start production, with over 80% remaining unstarted. Most projects are mired in land acquisition problems with the rest tripping over environment and forest clearance.

The minister met the state CM Buddhadeb Bhattacharjee on Wednesday to request him for assistance to get over land and environment problems for physical possession of some 2100 hectares that affect some 13 mining projects in West Bengal. Mr Jaiswal will have similar meetings with Jharkhand governor, alongwith environment minister Jairam Ramesh.

The coal minister also reiterated the government’s in-principle decision for disinvestement of upto 10% in Coal India Limited, with most of the shares likely to be alotted to emplyees and those whose land will be acquired. However, he said no timeframe has been fixed for it.